On October 9, Chongqing Brewery Co., Ltd. (SH.600132, “Chongqing Brewery”) held an interim general meeting to approve the Report of Chongqing Brewery Co., Ltd. on the Related-party Transaction on Major Asset Acquisition and Capital Increase in the Joint Venture (Draft) and other related proposals, marking the completion of the required examination and approval procedures for this major asset restructuring of Chongqing Brewery.
Carlsberg Group (“Carlsberg”) is the actual controller of Chongqing Brewery. In 2013, Carlsberg increased its shareholding in Chongqing Brewery to 60% through its wholly-owned subsidiary Carlsberg Brewery Hong Kong Co., Ltd. (“Carlsberg HK”) by way of partial offer and made a non-compete undertaking to inject the domestic brewery assets under its control into Chongqing Brewery within 4-7 years, in order to resolve the potential horizontal competition between both parties.
Chongqing Brewery started the major asset restructuring in March of this year and fulfilled its non-compete undertaking by Chongqing Brewery and Carlsberg jointly injecting assets into Chongqing Jianiang Brewery Co., Ltd., the joint venture between Chongqing Brewery and Carlsberg and controlled by Chongqing Brewery (“Chongqing Jianiang”). The transaction was implemented in three steps: (1) transfer of existing shares, i.e. Carlsberg HK transferred the 48.58% shares in Chongqing Jianiang to Chongqing Brewery at a consideration of RMB643 million; (2) capital increase in kind/with shares, i.e. Chongqing Brewery injected its operating assets by way of in-kind capital contribution (priced at RMB4.365 billion) and Guangzhou Carlsberg Consulting Management Co., Ltd. (“Carlsberg Consulting”) injected its shares in the domestic brewery enterprise by way of in-kind capital contribution (priced at RMB5.376 billion); and (3) share acquisition, i.e. Chongqing Jianiang acquired Carlsberg Breweries A/S’ shares in its controlled domestic brewery enterprise at a consideration of RMB1.794 billion. After the restructuring, Chongqing Brewery and Carlsberg Consulting held 51.42% and 48.58% shares in Chongqing Jianiang respectively.
This restructuring is implemented by way of joint capital increase in the existing joint venture by the A-share listed company and the controlling shareholder; in the meantime, in order to maintain Chongqing Brewery’s control over the joint venture after the restructuring, the transaction adopted a plan to combine “transfer of existing shares + capital increase in kind/with shares + share acquisition”. At the interim general meeting, the 27 proposals relating to the restructuring were passed with 100% affirmative votes, indicating the investors’ affirmation on the transaction plan and Carlsberg’s fulfillment of the non-compete undertaking.
JunHe represented Chongqing Brewery in this project and provided full-course legal services such as the design/feasibility study of the transaction structure, due diligence, drafting and modification of transaction documents, negotiation, issuance of legal opinions and communication with the stock exchange. Though this restructuring involved a large amount and quantity of assets, the schedule of the project was tight, and the COVID-19 epidemic imposed an adverse impact, JunHe with its consistent rigorous and efficient working style and meticulous and diligent service attitude has won high recognition of the client.